international accounting standard 1
DESCRIPTION
International Accounting Standard 1. Presentation of Financial Statements. Objective. Scope. List of IFRS. List of IAS(IFRS). Contd…. Definitions. Components of other comprehensive income. Definitions. Complete set of financial statements. General Features. - PowerPoint PPT PresentationTRANSCRIPT
International Accounting Standard 1
Presentation of Financial Statements
Objective
Basis for presentation of general purpose
financial statements to ensure comparability
with the entity’s financial statements of previous periods and
with the financial statements of other
entities
Overall requirements for presentation of financial statements, guidelines for their structure and
minimum requirements for their content
Scope
Financial Statements in accordance with IFRS
Interim Financial Reporting (IAS 34) – Only Para 15-35 applies
All entities – CSF / SFS (IAS 27)
Terminology used suitable for profit oriented entities
Entities not having equity – FS presentation of members’ or unit holders’ interests
IFRS 1 First-time Adoption of International Financial Reporting Standards
IFRS 2 Share-Based Payment
IFRS 3 Business Combination
IFRS 4 Insurance Contracts
IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations
IFRS 6 Exploration for and Evaluation of Mineral Resources
IFRS 7 Financial Instruments- Disclosures
IFRS 8 Operating Segment
List of IFRS
IAS 1 Presentation of Financial Instruments
IAS 2 Inventories
IAS 7 Cash Flow Statement
IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
IAS 10 Events after Reporting Date
IAS 11 Construction Contracts
IAS 12 Income Taxes
IAS 16 Property, Plant and Equipment
IAS 17 Leases
IAS 18 Revenue
IAS 19 Employee Benefits
IAS 20 Accounting for Government Grant and Disclosure of Government Assistance
IAS 21 The Effect of Changes in Foreign Exchange Rate
IAS 23 Borrowing Cost
List of IAS(IFRS)
Contd…
IAS 24 Related Party Disclosure
IAS 26 Accounting and Reporting by retirement Benefits Plan
IAS 27 Consolidated and Separate Financial Statements
IAS 28 Investments in Associates
IAS 29 Financial Reporting in Hyperinflationary Economies
IAS 31 Interest in Joint Ventures
IAS 32 Financial Instruments: Presentation
IAS 33 Earning Per Share
IAS 34 Interim Financial Reporting
IAS 36 Impairment of Asset
IAS 37 Provisions, Contingent Liabilities and Contingent Assets
IAS 38 Intangible Assets
IAS 39 Financial Instruments: Recognition and Measurement
IAS 40 Investment Property
IAS 41 Agriculture
DefinitionsGeneral Purpose Financial Statements
Those intended to meet the needs of users who are not in a position to require an entity to prepare reports tailored to their particular information needs
Impracticable Applying a requirement is impracticable when the entity cannot apply it after making every reasonable effort do so.
IFRSs Standards and Interpretations adopted by the IASB. They comprises: IFRS, IAS, Interpretation by IFRIC, SIC.
Material Omissions or misstatements of items
Are material if they could, individually or collectively, influence the economic decisions that users make on the basis of financial statements.
Notes Contain information in addition to that presented in the statement of financial position, statement of comprehensive income, separate income statement(if presented), statement of changes in equity and statement of cash flows.
Other comprehensive income
Comprises items of income and expense (including reclassification adjustments) that are not recognized in profit or loss as required or permitted by other IFRSs.
Components of other comprehensive income
Changes in revaluation surplus (IAS 16
Property, Plant and Equipment and IAS 38
Intangible Asset)
Actuarial gains and losses on defined
benefit plans recognized in
accordance with para 93A of IAS 19
Employee Benefits
Gains and losses arising from translating
the financial statements of foreign
operations (IAS 21 The Effects of Changes in
Foreign Exchange Rates
Gain and losses on remeasuring available
for sale financial assets (IAS 39 Financial
Instruments: Recognition and Measurement)
The effective portion of gains and losses on
hedging instruments in cash flow hedge (IAS
39)
Definitions
Owners Are holders of instruments classified as equity.
Profit or Loss Is the total of income less expenses, excluding the components of other comprehensive income.
Reclassification adjustments
are amounts reclassified to profit or loss in the current period that were recognized in the current or previous periods.
Total Comprehensive Income
Is the change in equity during a period resulting from transactions and other events, other than those changes resulting from transactions with owners in their capacity as owners.Total comprehensive income comprises all components of ‘profit or loss’ and of ‘other comprehensive income’.
Complete set of financial statements
A statement of comprehensive income for the period
A statement of changes in equity for the period
A statement of financial position as at the beginning of the earliest comparative period
General Features
Fair presentation and compliance
with IFRSs
Going Concern
Accrual basis of accounting
Materiality and
aggregationOffsetting
Frequency of reporting
Comparative Information
Consistency of
presentation
Fair presentation and compliance with IFRS
Financial position, financial performance
and cash flow
Explicit and unreserved statement
of compliance
Selection and application of Accounting policies (IAS 8),
presenting information to provide relevant, reliable, comparable and understandable information and
Additional Information
Inappropriate Accounting
Policies
Fair presentation and compliance with IFRS
•Management conclusion about fair presentation•Compliance with IFRS, except departure from particular requirement to achieve fair presentation•Title of departed IFRS, nature of departure, treatment IFRS requires, reason why treatment would mislead•Financial effect of the departure on each item
Departure from IFRS – Extreme Circumstances'
(Disclosure)
Departure from requirement of IFRS in prior
period
Departure from IFRS but regulatory
framework prohibits departure
Going Concern
Assessment of entity’s ability by
management
GCB unless
contrary intention
or no realistic
alternative to
liquidation
Disclosure of Uncertainties
Disclosure when financial statements are not on going concern
basis
Accrual Basis of Accounting
An entity shall prepare its financial statements, except
for cash flow information using the accrual basis of
accounting.
Materiality and aggregation
An entity shall present separately each
material class of similar items. It shall present separately items of a dissimilar nature or function unless they
are immaterial.
Offsetting
An entity shall not offset assets and liabilities or income and expense, unless required or
permitted by an IFRS except:
When offsetting reflects substance of the
transaction or other event
Detracts from ability of users both to understand the transaction, other events and conditions that have
occurred and to assess the entity’s future cash flows.
Frequency of reporting
At least annually
In case change in end of reporting period
and presents financial statement for period
longer or shorter than one year – disclosure
Comparative InformationFor all amounts reported
in current period’s financial statements except when IFRSs
permit or require otherwise
When the entity changes the presentation or
classification of items – Reclassification of
comparative amounts – Disclosure:
When impracticable to reclassify comparative
amounts, an entity shall disclose:
Consistency of presentation
•It is apparent, following a significant change in the nature of the entity’s operations or a review of its financial statements, that another presentation or classification would be more appropriate having regard to the criteria for the selection and appropriation of accounting policies in IAS 8 or•An IFRS requires a change in presentation
An entity shall retain the
presentation and
classification of items in financial
statements from on period to the
next unless:
Structure and content
Introduction
Identification of the financial
statements
Statement of financial position
Statement of comprehensiv
e income
Statement of changes in
equity
Statement of cash flows
Notes Other disclosures
Identification of the financial statements
•the financial statements and distinguish them from other information in the same published document•each financial statement and the notes.
An entity shall
clearly identify
•The name of reporting entity or other means of identification, and changes in that information from the end of the preceding reporting period•Whether the financial statements are of an individual entity or a group of entities•The date of the end of the reporting period or the period covered by the set of financial statements or notes•The presentation currency, as defined in IAS 21; and•The level of rounding used in presenting amounts in the financial statements.
Display of information
prominently, and repeat it when
necessary for the information
presented to be understandable:
Statement of financial position
Information to be presented in the
statement of financial position
Current / non current
distinction
Current assets
Current liabilities
Information to be presented either in the statement of financial
position or in the notes
Information to be presented in the statement of financial position
Property, plant and
equipment
Investment property
Intangible assets
Financial asses
Investments accounted for
using the equity method
Biological assets
Trade and other
receivables
Cash and cash
equivalents
Non current assets held for sale and
discontinued operations
Trade and other
payables
Provisions
Financial liabilities
Liabilities and assets for current tax as defined in
IAS 12
Deferred tax liabilities and
deferred tax assets as defined in IAS 12
Liabilities included in disposal group classified as held
for sale
Non controlling interests,
presented within equity; and
Issued capital and reserves attributable
to owners of the parent
Information to be presented in the statement of financial position
Additional Line items, heading and subtotals in the statement
of financial position when such presentation is relevant
to an understanding of the entity
Deferred tax assets (liabilities) not to be classified as current
assets (liabilities)
Current / non current distinction
•when a presentation based on liquidity provides information that is reliable and more relevant.•When exception applies, in order of liquidity.
Presentation of financial position by
classification in current and non current assets,
and current and non-current liabilities
except:
•No more than twelve months after the reporting period, and •More than twelve months after the reporting period
Disclose amount expected to be recovered or settled
after more than twelve months for each asset and
liability line item that combines amounts
expected to be recovered or settled:
Current assets
Current liabilities
Specific Discussion (Para 70-76)
Trade payables, accrual for employees and other operating costs – Normal operating cycle
Other current liabilities – financial liabilities, bank overdrafts, current portion of NCL, dividends payable, income taxes and other non trade payables – Whether due for settlement within twelve months.
Original term of liability, refinance, reschedule agreement after reporting period
Discretion of entity to refinance / roll over obligation
Breach of provision of long term loan arrangement
Events after the Reporting Period (IAS 1)
Information to be presented either in the statement of financial position or in the notes
Entity shall disclose, either in the statement of financial position or in the
notes, further sub classification of the line items presented, classified in a manner appropriate to the entity’s operations.
Sub-classification depends on the requirement of IFRSs, size, nature, functions of the amounts
involved.
Information to be disclosed for each class
of share capital
Description of the nature and purpose of each reserve within equity
Statement of comprehensive income
• Information to be presented in the statement of comprehensive income
• Profit or loss for the period• Other comprehensive income for the period• Information to be presented in the statement of
comprehensive income or in notes
Analysis of Expenses
• ‘Nature of expenses’ method• ‘Function of expenses’ method
Statement of Changes in equity
• Total comprehensive income for the period• Effect of retrospective application or
retrospective restatement (IAS 8)• Reconciliation between the carrying
amount at the beginning and the end of the period
• Dividend distributed per share
Statement of cash flows – IAS 7
Notes
• Structure• Disclosure of Accounting Policies• Sources of estimation uncertainty • Capital• Other disclosures
Notes - Structure
• Basis of preparation of the financial statements and the specific accounting policies
• Information required by IFRSs that is not presented elsewhere in the financial statements
• Information relevant to an understanding of financial statements
• Systemic manner, cross reference
Notes: Disclosure of Accounting Policies
• Measurement basis used in preparing the financial statements
• Other accounting policies used that are relevant to an understanding of FS
• Judgments that management has made in the process of applying the entity’s accounting policies
Notes: Sources of estimation uncertainty
• Information about the assumption• Major sources of estimation uncertainty
Capital
An entity shall disclose information that enables users of its financial statements to evaluate the entity’s objectives, policies and processes for managing capital
Notes: Other disclosures
• An entity shall disclose in the notes:– Dividend proposed or declared – Amount of any cumulative preference dividends
not recognized
• Domicile and legal form of the entity, its country of incorporation and the address of its registered office
• Description of nature of the entity’s operations and its principal activities
• Name of the parent and the ultimate parent of the group